Sunday, April 11, 2021

Sunday Morning Chartology

 

The Morning Call

 

4/12/21

 

I am travelling tomorrow and Tuesday, so here is Monday Morning Chartology

 

The Market

 

    Technical

 

 

Last week, the S&P reset its short term trend from a trading range to up.  Indeed, this chart is back into the ‘what can I say?’ territory.  The index is above both DMA’s and in uptrends across all timeframes.    My Market assumption remains: ‘while valuations continue to reach historical extremes, I can’t see an end to this uptrend as long as the money keeps flowing with abundance and in the absence of any major negative exogenous event.’

 


 

 

The long bond struggled higher on the week.  While some progress was made, it could not make a higher high.  That leaves it in a very short term mini pennant formation.  For the moment, it appears a bottom has been made.  But the question is, how much upside momentum does TLT have?  Stay tuned.

 

 

 


 

 

GLD continued to gather strength last week.  While it remains in a downtrend dating back to last October, it did manage to negate a really short term downtrend.  Remember that gold got very overextended to the upside late last year.  So, the current retreat is normal. It needs to show more follow through to the upside---like voiding that downtrend dating from October 2020---before I get too optimistic about a return to former highs.  In short, follow through.

 

 

 


 

 The dollar had a tough week with its 200 DMA reverting from support to resistance.  The good news is that it remains in a trend of higher highs and higher lows.  As you know, I believe that the recent strength in UUP is the result of the US economy performing better that the rest of the globes.  This week’s data and my restrained view of the US’s future growth prospects notwithstanding, I think that this will continue to be the case (mainly because the rest of the world’s central bankers and political classes have done an even worse job of guiding their economies than our own.)




 

I thought that I would throw in a picture of the VIX this week.  As you can see, it has been whacked the last couple of weeks, pushing towards historic lows.  That is a signal that fear is being drained from the Market and ultimately leads to overconfidence and then correction.

 




Friday in the charts.

            https://www.zerohedge.com/markets/big-tech-bonds-bid-inflation-jumps-dollar-dumps

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of Last Week

 

US statistical releases, including the primary indicators were negative last week. That is a bit of a surprise; though, again, we are still working our way through February results.  So, one unexpectedly poor week is no reason to question the ongoing recovery. 

 

The one number that does bear mentioning is the very hot March PPI report.  This likely indicates that the US economy is entering the period in which everyone agrees will witness rising inflationary pressures.  Where there is disagreement is whether or not the increases will be transitory.  As you know, Chair Powell assures us that that will be.  While many other experts disagree.  As you also know, I am in the latter camp.  Whoever is right is less important than the fact that we appear to be entering the period of rising inflation and we will know soon enough if it is a temporary phenomenon or a more permanent one.

 

One other comment.  We now know the rough terms of Biden’s Plan, phase one.  Last week, I held out the hope that if his proposal was composed of productivity enhancing infrastructure projects and was paid for with taxes (or reduced spending in other government programs; as if), then, in my opinion, it would be a plus for the US economy.

 

Well, no such luck.  Unfortunately, only a fraction of the spending goes to true infrastructure improvement.  The rest is basically social welfare which is anything but productivity enhancing.  The bottom line is that this plan in its current form would raise inflationary pressures and inhibit economic growth (servicing a massive increase in debt usurps capital investment).  In short, this only makes me more convinced that rising inflation and slower secular growth is the correct forecast.

 

Overseas, the data flow was again quite positive, supporting the notion that the rest of the world’s economies are also recuperating.

 

Bottom line. ‘As I have tried to highlight, the issue isn’t whether or not the US (world) economy is rebounding, the issue is its magnitude and duration.  As you know my opinion is that following an initial snapback, the US economy will likely return to its former subpar secular growth rate, stymied by irresponsible mix of fiscal/monetary policies.’

 

                                US

 

 

                        International

 

 

Other

                       

               

         News on Stocks in Our Portfolios

           

What I am reading today

           

            Quote of the day.

            https://cafehayek.com/2021/04/quotation-of-the-day-3489.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

 

 

‘Lost golden city’ arises out of Egyptian sands.

https://www.zerohedge.com/geopolitical/lost-golden-city-rises-egyptian-sand

 

Remains of an alien planet lurk deep within earth’s mantle.

https://www.zerohedge.com/geopolitical/remains-alien-planet-lurk-deep-within-earths-mantel-researchers-suggest

 

 

 

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Friday, April 9, 2021

The Morning Call----Yellen's Plan

 

The Morning Call

 

4/9/21

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/dollar-dump-sparks-bonds-bullion-bitcoin-big-tech-bid

 

            The dollar’s unexpected positive performance.

            https://www.ft.com/content/4ed6e64b-d253-4886-b7b9-fe428acad728

 

            As talk about inflation rises so does the interest in gold.

            https://www.nytimes.com/2021/04/08/business/inflation-gold-investing-funds.html

 

            Bullish sentiment hits a high.

            https://www.zerohedge.com/the-market-ear/cdbc9ew562

 

            VIX near a low.

            https://www.zerohedge.com/the-market-ear/crlqgppmel

           

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                        International

                       

February German industrial production declined 1.6% versus consensus     of +1.5%; its February trade balance was +E19.1 billion versus +E20.0 billion.

 

March Chinese CPI was -0.5% versus forecasts of -0.4%.

 

                        Other

 

                          March rail carloadings up 4.1% YoY.

                          https://www.calculatedriskblog.com/2021/04/aar-march-rail-carloads-up-41-yoy.html

                             

                          Getting GDP back to pre-Covid levels.

                          https://global-macro-monitor.com/2021/04/07/getting-back-pre-covid-gdp-levels/

 

                          The global economic expansion accelerates.

                          https://www.markiteconomics.com/Public/Home/PressRelease/42ddeb601f15427eb51f4b5e75a7a195

 

                                  How trillions in stimulus created a job crisis.

                          https://www.zerohedge.com/markets/there-are-absolutely-no-job-seekers-how-trillions-stimulus-sparked-historic-job-market

 

 

                        The Fed

 

              Highlights from Powell’s speech to IMF panel  (nothing new).

              https://www.zerohedge.com/markets/watch-live-feds-powell-speaks-imf-panel-here-are-key-highlights

 

                  Things are worse in Europe.

              https://www.zerohedge.com/economics/monetary-policy-america-mess-things-are-even-worse-europe

 

            Biden’s Plan

 

              Janet Yellen is serious and that’s bad.

              https://www.realclearmarkets.com/articles/2021/04/07/janet_yellen_is_serious_and_thats_really_sad_771835.html

 

              More Biden Plan analysis.

              https://issuesinsights.com/2021/04/06/will-you-be-drowned-by-bidens-coming-tidal-wave-of-tax-hikes/

 

            Today’s investing lesson

 

              Too smart for his own good (a bit too moralistic, but you will get the point).

              https://alephblog.com/2021/04/08/too-smart-for-his-own-good/

 

 

            Bottom line.

 

              More on valuations.

              https://www.advisorperspectives.com/dshort/updates/2021/04/07/the-q-ratio-and-market-valuation-march-update

 

                  The macro risks to the stock market are rising.

              https://www.zerohedge.com/markets/macro-risks-stock-market-are-mounting

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            US mulls sending warships into Black Sea (think Ukraine).

            https://www.zerohedge.com/geopolitical/us-mulls-deploying-warships-black-sea-be-ready-respond-ukraine-crisis

 

 

            A tiny particles wobble could upend the laws of physics.

            https://www.nytimes.com/2021/04/07/science/particle-physics-muon-fermilab-brookhaven.html

 

            Four social security secrets for bigger paychecks.

            https://www.usatoday.com/story/money/personalfinance/retirement/2021/04/07/social-security-bigger-checks/115665796/

 

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Thursday, April 8, 2021

The Morning Call---All systems Go at the Fed

 

The Morning Call

 

4/8/21

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/small-caps-cryptos-clubbed-bonds-buck-bounce

 

            More tech giants joining the breakout.

            https://www.zerohedge.com/the-market-ear/cdckqxfell

 

            As NASDAQ nears high.

            https://www.zerohedge.com/the-market-ear/c82148a2oy

 

            Is oil trying to tell us something?

            https://www.zerohedge.com/the-market-ear/cd0tit6qhg

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                               

 Weekly jobless claims were reported at 744,000 versus consensus of 680,000.

 

The February trade balance was -$71.1 billion  versus estimates of -           $70.5 billion.

                          https://www.calculatedriskblog.com/2021/04/trade-deficit-increased-to-711-billion.html

 

                        International

 

                          February German factory orders rose 1.2%, in line.

 

                          February EU PPI was up 0.5% versus expectations of up 0.6%.

 

The March EU construction PMI came in at 50.1 versus 45.0 in February; the March German construction PMI was 47.5 versus 41.0 in February; the March UK construction PMI was 61.7 versus 53.3 in February.

 

                        Other

 

                          Consumer credit explodes higher.

                          https://www.zerohedge.com/markets/biggest-beat-record-consumer-credit-explodes-higher-americans-rediscover-their-love-credit

           

                          The latest nowcasts anticipate a strong US Q1.

                          http://www.capitalspectator.com/us-gdp-nowcasts-continue-to-anticipate-stronger-growth-for-q1/

 

                          A global K shaped recovery

                          https://www.nytimes.com/2021/04/06/business/economy/covid-world-economy.html

 

            The Fed

 

Yesterday, the FOMC released the minutes of its latest meeting---which didn’t deviate from the current narrative, i.e., the Fed is cautiously optimistic about the economy but not so much that it is considering a change in interest rates or its bond buying program.

              https://www.zerohedge.com/markets/fomc-minutes-signal-optimism-fiscal-plans-some-officials-fear-stability-risks

 

The ECB also released the minutes of its latest General Council meeting.  Like the Fed, nothing has changed---more low rates and QE.

  https://www.zerohedge.com/markets/ecb-minutes-here-are-main-highlights

 

              Markets beginning to price in rate hike next year.

              https://www.ft.com/content/3d3af68a-f25f-4cd5-902d-2b1c21b8cadb

 

            Biden’s Plan

 

              A negative view.

              https://www.washingtontimes.com/news/2021/apr/5/bidens-proposed-infrastructure-spending-is-wastefu/

 

              The bloated infrastructure plan.

              https://www.city-journal.org/bidens-bloated-infrastructure-proposal

 

              This is a good pro/con discussion.

              https://reason.com/video/2021/04/05/does-national-debt-still-matter-americas-greatest-gamble/

 

            Inflation

 

              The market’s expectation for inflation and real rates over the next five years.

              http://econbrowser.com/archives/2021/04/the-markets-expectations-of-inflation-over-the-next-five-years

 

            The coronavirus

 

              Where the virus was the deadliest for seniors.

              https://politicalcalculations.blogspot.com/2021/04/where-was-covid-19-deadliest-for-us.html#.YG3x-51KiUk

 

              The tyranny of ‘enlightened’ experts.

              https://www.zerohedge.com/political/tyranny-enlightened-experts

 

            Today’s Investment Lesson

 

              The stock market as a discounting mechanism.       

              https://sentimentrader.com/blog/manufacturing-soars-another-lesson-in-the-stock-market-as-a-discounting-mechanism/

 

                Bottom line.

 

              More on valuations.

              https://www.advisorperspectives.com/dshort/updates/2021/04/06/is-the-stock-market-cheap

 

  Another family office appears to be blowing up.

  https://www.zerohedge.com/markets/another-family-office-blowing-jpm-dumps-9mm-share-block-academy-sports

 

    News on Stocks in Our Portfolios

 

Automatic Data Processing (NASDAQ:ADP) declares $0.93/share quarterly dividend, in line with previous.

 

 

What I am reading today

 

            Kiev forces primed for attack.

            https://www.zerohedge.com/geopolitical/kievs-forces-are-primed-attack-if-they-can-overcome-their-own-minefields

 

            This is what is happening at the border.

           

 

            Time warps.

            https://www.brainpickings.org/2013/07/15/time-warped-claudia-hammond/

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

 

Wednesday, April 7, 2021

The Morning Call--Doubts grow about Biden's infrastructure plan

 

The Morning Call

 

4/7/21

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/bonds-bullion-bid-dollar-skids-biden-bonanza-hopes-fade

 

            Look at VIX speculators.

            https://www.zerohedge.com/the-market-ear/chbgotgufv

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly mortgage applications fell 5.1% while purchase applications were                         off 4.6%.

                             

The February jobs opening (JOLTS) report showed available jobs of 7.4 million versus expectations of 7.0 million.

                              https://www.calculatedriskblog.com/2021/04/bls-job-openings-increased-to-74.html

 

                        International

 

The February Japanese leading economic indicators came in at 99.7 versus 98.5 in January.

 

The March final German services PMI was 51.5 versus estimates of 50.8; the composite PMI was 57.3 versus 56.8; the March final EU services PMI was 49.6 versus 48.8; the composite PMI was 53.2 versus 52.8; the final UK March services PMI was 56.3 versus 56.8; the composite PMI was 56.4 versus 56.6.

 

                        Other

 

                          Don’t mistake rapid job gains with for a strong labor market.

                          https://www.advisorperspectives.com/commentaries/2021/04/06/dont-mistake-rapid-jobs-gains-for-a-strong-labor-market

 

                                                  UBS predicts 80,000 retail stores will close in next five years.

                          https://www.zerohedge.com/markets/ubs-predicts-80000-retail-stores-will-close-five-years

 

                                  Beijing orders banks to curtail loan growth for rest of 2021.

                                  https://www.zerohedge.com/markets/china-credit-impulse-set-collapse-beijing-orders-banks-curtail-loan-growth-rest-2021

                       

 

                        The Fed

 

              When and where to exit.

              https://www.zerohedge.com/the-market-ear/cyeloktloz

 

 

                Inflation

 

                    Booming prices.

               http://scottgrannis.blogspot.com/2021/04/booming-prices.html

 

               Counterpoint

                https://alhambrapartners.com/2021/04/04/weekly-market-pulse-buy-the-rumor-sell-the-news/

 

                    Somewhere in between.

               http://www.capitalspectator.com/will-the-fed-be-fored-to-raise-rates-earlier-than-expected/

 

                  A trillion here, a trillion there.

              https://www.zerohedge.com/political/trillion-here-trillion-there

 

 

                Biden’s Plan

 

                  Yields slide as doubts grow about Biden’s infrastructure plan.

              https://www.zerohedge.com/markets/yields-slide-doubts-grow-over-biden-infrastructure-plan

 

                  Can the US borrow its way to higher economic growth?

              https://www.zerohedge.com/markets/can-us-borrow-its-way-higher-growth-spoiler-no

 

                The coronavirus

 

              Why the silence in the face of the Covid tyranny?

              https://www.aier.org/article/why-the-silence-in-the-face-of-covid-tyranny/

 

              The virus has made where you live even more important.

              https://www.bloomberg.com/opinion/articles/2021-04-05/covid-has-made-where-you-live-matter-even-more?utm_campaign=socialflow-     organic&cmpid%3D=socialflow-twitter-view&utm_source=twitter&utm_content=view&utm_medium=social&sref=loFkkPMQ

 

           

            Bottom line.

 

              March dividends by the numbers.

              https://politicalcalculations.blogspot.com/2021/04/dividends-by-numbers-in-march-2021.html#.YGyOiZ1KiUk

 

                  More on valuations.

               https://www.advisorperspectives.com/dshort/updates/2021/04/06/regression-to-trend-another-look-at-long-term-market-performance

 

 

    News on Stocks in Our Portfolios

 

Paychex (NASDAQ:PAYX): FQ3 Non-GAAP EPS of $0.96 beats by $0.04; GAAP EPS of $0.97 beats by $0.05.

Revenue of $1.11B (-2.6% Y/Y) in-line.

 

MSC Industrial Direct (NYSE:MSM): Q2 Non-GAAP EPS of $1.03 beats by $0.01; GAAP EPS of $0.32 misses by $0.64.

Revenue of $774M (-1.5% Y/Y) misses by $4.06M.

 

What I am reading today

 

            The UK and EU pledge to back Ukraine amidst Russian military buildup.

            https://www.theguardian.com/world/2021/apr/05/eu-sounds-alarm-at-russian-troops-ukraine-border-moves

 

            Russia begins massive ‘combat readiness’ exercise.

            https://www.zerohedge.com/geopolitical/russias-army-begins-massive-combat-readiness-inspection-ukraine-tensions-soar

 

            More reasons for optimism.

            https://www.adamsmith.org/blog/reasons-for-optimism-space

 

 

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